Credit card fraud and ID theft statistics

With compromised credit cards and data breaches often in the
news in the past couple of years, fraud is top of mind with many people. Though
EMV
chip cards have made some payments safer, experts predict fraud – specifically card-not-present
fraud – will remain a growing problem for years to come.

Data breaches
When
the first surge of major corporate data breaches was reported in 2014 and 2015,
many Americans hoped it was a just a brief trend. Those hopes faded as even
more large companies became the target of cybercriminals, with the most recent
being the massive data breach at the credit bureau Equifax in September 2017.

Tracking by the Identity Theft Resource Center (ITRC) and
CyberScout shows that there were 791 data breaches reported in the U.S. by the
end of June 2017. This is a 29 percent increase over the same period in 2016,
and the highest number recorded for any half-year period.1

At this rate, the ITRC estimates that the number of breaches will reach
1,500 by the end of 2017, representing a 37 percent annual increase over the record
high of 1,093 breaches in 2016.1

Four out of five of the largest data breaches ever recorded
occurred in 2016. These included two Yahoo breaches, which affected 1 billion
people and 500 million people, respectively, a MySpace breach, which affected
360 million and a LinkedIn breach, which affected 100 million. 2

Of the 2017 data breaches (through June), 5.8 percent occurred in
the banking, credit, and financial sectors, a jump from 3.6 percent in the
first half of 2016. The health and medical sectors accounted for 22.6 percent,
the government and military sectors 5.6 percent, and education 11.3 percent.
Topping the list is the business sector, accounting for 54.7 percent of all
reported data breaches in the first half of 2017.1

Card fraud
and identity theft
The Federal Trade Commission’s online database of consumer complaints has
compiled 13 million complaints from 2012 to 2016, with 3 million in 2016 alone.
Of those, 42 percent were fraud related, and 13 percent were identity theft
complaints.8

Almost 1.3 million complaints were fraud-related. Consumers
reported paying over $744 million in those fraud complaints; the median amount
paid was $450. Fifty-one percent of the consumers who reported a fraud-related
complaint also reported an amount paid. 8

More than half (55 percent) of the fraud-related complaints listed
a method of initial contact, and of those, 77 percent were contacted by phone,
while only 8 percent were first reached by email. Only 3 percent were contacted
by mail.8

Florida had the highest per capita rate of reported fraud,
followed by Georgia and Michigan.8

When it comes to identity theft, employment- and tax-related fraud
was the most common, accounting for 34 percent of complaints, while 33 percent
was credit card fraud. Phone or
utilities fraud accounted for 13 percent, and bank fraud was another 12
percent.8

Michigan is the state with the highest per capita rate of
reported identity theft complaints, followed by Florida and Delaware. 8

Card-not-present
fraud
While EMV chip cards have cut counterfeit fraud, "card not present" (CNP)
fraud is rising. CNP fraud includes
telephone, internet and mail order transactions in which the cardholder does
not physically present the card to the merchant.

According to a 2017 report by the US Payments Forum, the increased
security of chip cards forced criminals to shift the focus of their activities
to CNP transactions.6

The United States is especially vulnerable to CNP fraud, as it
leads the world with the highest percentage of e-commerce sales, with 77
percent of U.S. merchants selling online.6

The Payments Forum report includes a prediction that the EMV
implementation is projected to lead to an increase of CNP fraud in the U.S.
from $3.1 billion in 2015 to $6.4 billion in 2018.6

How the
EMV migration has changed the face of fraud
When it comes to credit card fraud, the big development in the United States
over the last few years has been the move from magnetic stripe readers to EMV
smart chip authentication at payment terminals. The technology migration passed
a major milestone on Oct. 1, 2015, when a liability shift occurred that placed
the cost of card-present fraud on the retailer or card issuer that hadn't
upgraded to the new system.

Globally, in Q4 2016, 52.4 percent of card-present transactions were
EMV transactions. In the U.S., only 18.61 percent of card-present transactions
used EMV chips for authentication in the same period, but that number is
quickly rising.4

A quick look at the immediate effect of the EMV migration shows
that counterfeit fraud decreased by 27 percent in terms of overall U.S. dollar
volume in January 2016 compared to January 2015, before the liability shift.5
That figure is based on Mastercard fraud reports from a compilation of large
chip-enabled U.S. merchants.

How fraud
victims are affected
The Identity Theft Resource Center’s report, “Identity Theft: The Aftermath
2016” found that nearly 20 percent of Americans surveyed were the victim of
some kind of criminal identity theft in 2015. Of those, 9.2 percent said their
identity was used to commit a financial crime that resulted in an arrest
warrant.9

The effects of this criminal identity theft are staggering.
Fifty-five percent of victims missed time from work, and 44 percent said they lost
out on an employment opportunity. Additionally, 60.7 percent had to borrow
money, and 29.5 percent had to request government assistance, such as welfare
or food stamps.9

Additionally, as a result of criminal identity theft, victims
tapered their use of online accounts (33.3 percent), had to close existing
financial accounts (34.3 percent), took out a bank loan (3.5 percent) and even
took out payday loans (8.1 percent).9

In 2015, 60 percent of respondents reported they were victims of
new account fraud, which occurs when a criminal opens a new account in the name
of the victim. Of those, 38.5 percent reported new credit card accounts were
opened in their names, while 19.1 percent reported new checking or savings
accounts were opened.

Nearly half, 46 percent, of respondents reported fraudulent
activity on existing accounts. Of those, 25.7 percent said charges were made to
an existing credit card, 21.4 percent said transactions were made using an
existing checking or savings account, 15.9 percent said transactions were made
using an existing debit account, 10.5 percent said transactions were made on an
existing loan or line of credit, and 18.5 percent said transactions were made
using another type of financial account, such as PayPal.9

Of those who experienced fraud on existing accounts, 22.4 percent
said they changed credit card companies following the fraud.9

When asked how being a fraud victim made them feel, most
respondents (69 percent) said they felt fear regarding their personal financial
security. Twenty-three percent said they now feared for their physical safety,
and 8 percent reported feeling suicidal. 9

Emotions and feelings following identity theft

2015

2014

2013

2009

2008

2007

Denial or disbelief

43%

44%

42%

49%

31%

34%

Frustration or annoyance

81%

79%

81%

Frustration

74%

68%

74%

Annoyance

67%

64%

66%

Rage or anger

58%

62%

65%

78%

65%

80%

Isolation

31%

23%

24%

24%

27%

24%

Feelings of betrayal

44%

52%

50%

49%

60%

48%

Feelings of guilt or that you caused this to happen or did something wrong

24%

22%

21%

24%

22%

27%

Shame or embarrassment

28%

30%

29%

27%

24%

29%

Fear regarding my personal financial security

69%

66%

69%

57%

52%

56%

Fear for financial security of family members

43%

36%

31%

33%

32%

33%

Fear for my physical safety

23%

20%

18%

16%

14%

14%

Loss of ability to trust

51%

44%

46%

29%

31%

28%

Sense of powerlessness or helplessness

54%

54%

50%

63%

63%

57%

Overwhelming sadness

32%

28%

32%

36%

32%

29%

Feeling suicidal

8%

4%

6%

8%

4%

6%

Other

11%

8%

3%

None of these apply

5%

8%

3%

Source: Identity Theft Resource Center

Concerned,
and sometimes taking action, about fraud
With the rise in security breaches, Americans are increasingly concerned about
identity theft, which often leads to payment fraud. But other than being
concerned, Americans find themselves largely unable to do anything about it.

According to Experian’s Identity Theft Survey, 84 percent of
respondents said they were concerned about the security of their personal
information online, yet 64 percent said it was “too much of a hassle to worry
about taking steps to secure their online information.”7

Moreover, 53 percent of those surveyed said they believe that
staying on top of their financial transactions was a challenge.7

A major data breach, though, can lead at least some Americans to
take action.

A 2017 CreditCards.com survey in the wake of the massive Equifax
data breach found that 26 percent of respondents reviewed their credit scores
or credit reports within two weeks of the breach.3

However, the survey also found that even in the wake of the breach
that exposed the information of nearly 146 million Americans (such as names, Social
Security numbers and addresses), 21 percent have never checked their credit
reports or credit scores.3

Of those who did check their credit reports or credit scores in
the wake of the Equifax breach, older millennials (27- to 36-year-olds) did so
in a higher percentage (33 percent) than any other age group.3

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